“Over time, we expect both of these to improve as we scale our CAS business and separate the Diabetes business.”

In context

“als. Q1 revenue of $8.6 billion grew 8.4% reported and 4.8% organic, in line with our guidance. Our adjusted gross margin was 65.1%, down 80 basis points year-over-year. This was expected and stable when compared to Q4. I'll walk you through the 4 main components that drove the gross margin this quarter. First, we continued to benefit from pricing as we launched new products and maintained pricing discipline on contracting, and this had a 30 basis points benefit. Second, business mix, as I noted last quarter, continues to be a near-term headwind, approximately 70 basis points this quarter split roughly equally between CAS and Diabetes. CAS today is impacted by the mix of lower-margin capital to higher-margin catheters and Diabetes is early in its manufacturing ramp of the Simplera sensor. Over time, we expect both of these to improve as we scale our CAS business and separate the Diabetes business. Third, our COGS efficiency programs, net of inflation, continued to benefit gross margin as our global operations and supply chain organization execute to deliver savings on materials and drive efficiencies in our manufacturing plants. This quarter, this was more than offset primarily by the manufacturing ramp of Affera that we incurred last year. The net of these items was a 50 basis points headwind. And finally, foreign exchange was a 10 basis points tailwind to gross margin. Moving down the P&L. Adjusted R&D was up 7.7%, 100 basis points ahead of revenue growth. We're allocating significant capital to high-growth projects across our businesses, including large increases in both Cardiovascular and Diabetes. With SG&A, we continued to drive leverage, growing at 170 basis points below rev”